Buying stocks based on historical low price-to-book (P/B) ratios has been shown to be an effective investment strategy. At GuruFocus, our “Top 25 Historical Low P/B Ratio Companies” portfolio has outperformed the S&P 500 by 16.13 percent since its inception in 2010. Our portfolio is rebalanced once a year and can be viewed at GuruFocus.com. Below is the latest list of stocks that are trading near historical low P/B ratios and are widely held by the investing gurus we follow:
Kellogg Co (K) is trading at its 10-year low P/B ratio of 5.81. The company is engaged in the manufacture and marketing of ready-to-eat cereal and convenience foods. Its brands include Kellogg’s, Keebler, Cheez-It, Murray, Austin and Famous Amos. The 10-year median P/B ratio is 8.4. The stock is undervalued since its book value per share has been accelerating to higher 5- and 1- year annual growth rates of 11.8 and 47.8 percent, compared to its 10-year annual growth rate of 4.10. The stock would be priced at $88.10 if trading at its 10-year median P/B ratio. The stock is held by 16 gurus we follow with Hotchkis & Wiley holding the largest position of 2.38 million shares, representing 0.66 percent of the shares outstanding.
Market Cap: 21.7 Billion, P/E: 11.90
Business Predictability: 4/5, Financial Strength: 6/10, Profitability & Growth: 8/10
Intercontinental Exchange Inc (ICE) is trading at a low P/B ratio of 1.26, near its 10-year low of 1.18. The company is a leading global network of regulated exchanges and clearing houses for financial and commodity markets. It completed the acquisition of NYSE Euronext in November last year. The acquisition doubled the company’s book value, essentially making past comparisons difficult. Earnings growth has turned negative over the past year. Stocks tend to languish over a couple years after large mergers or acquisitions. At this time the stock is overvalued in relation to its earnings that would have to grow at an annual rate of 27.72 percent to justify the stock’s current price. The stock is held by 11 gurus with Steve Mandel of Lone Pine Capital holding the largest position of 3.40 million shares, representing 2.96 percent of the shares outstanding.
Market Cap: 22.28 Billion, P/E: 46.30
Business Predictability: 2/5, Financial Strength: 5/10, Profitability & Growth: 7/10
Bio-Rad Laboratories Inc (BIO) is trading at its 10-year low P/B ratio of 1.43. The company manufactures and supplies the life science research, healthcare, analytical chemistry and other market with a broad range of products and systems used to separate complex chemical and biological material and to identify, analyze and purify their components. The stock is not a bargain at this point with its slowing growth in book value per share. The BVPS growth over the past year has been 7.8 percent compared with its 10-year annual average of 14.9 percent. It is near fair value in relation to its Projected FCF value of $108.69 and Median P/S value of $110.13. The stock is held by 10 gurus with John Rogers of Ariel Investment holding the largest position of 983,452 shares, representing 3.41 percent of the shares outstanding.
Market Cap: 3.21 Billion, P/E: 52.90
Business Predictability: 3/5, Financial Strength: 7/10, Profitability & Growth: 6/10
Denbury Resources Inc (DNR) is trading at a low P/B ratio of 0.97, near its 10-year low of 0.94. It is a domestic oil and gas company operating primarily in the Gulf Coast and Rocky Mountain regions. The stock is undervalued with its low P/B ratio below 1 since the book value per share is still growing, although at a slow rate of 2.4 percent over the past 12 months. Typically if a stock’s book value per share is still growing, the P/B ratio should not be below 1. The stock is held by 9 gurus we follow with Leon Cooperman of Omega Advisors holding the largest position of 6.04 million shares, representing 1.72 percent of the shares outstanding.
Market Cap: 4.96 Billion, P/E: 26.10
Business Predictability: 3/5, Financial Strength: 5/10, Profitability & Growth: 8/10
Meridian Bioscience Inc (VIVO) is trading at its 10-year low P/B ratio of 4.53. The life science company develops, manufactures, sells, and distributes diagnostic test kits primarily for gastrointestinal, viral, respiratory, parasitic infectious diseases. The 10-year median P/B ratio of 5.6 would price the stock at $22.00, but book value per share growth has slowed the past 12 months to 6.6 percent compared to its 10-year annual average of 10.9 percent. It is near fair value in relation to the industry mean P/B ratio of 4.35. The stock is held by seven gurus we follow with Jim Simons of Renaissance Technologies holding the largest position of 695,276 shares, representing 1.67 percent of the shares outstanding.
Market Cap: 731.2 Million, P/E: 20.80
Business Predictability: 3/5, Financial Strength: 10/10, Profitability & Growth: 7/10
Waters Corp (WAT) is trading at its 10-year low P/B ratio of 4.44. The company is an analytical instrument manufacturer whose products are used by pharmaceutical, life science, biochemical, industrial, nutritional safety, environmental, academic and governmental customers working in research and development, quality assurance and other laboratory applications. The stock is undervalued since its book value per share is still growing at a high rate of 21.9 percent over the past 12 months compared to an annualized rate of 23 percent over the past 10 years. The 10-year median P/B ratio of 9 is too high, so I will use the 3-year median for comparisons since the price has a higher correlation with it. In relation to the 3-year median of 5.5, the stock is undervalued by 20 percent. The stock is held by seven gurus we follow with Ruane, Cunniff & Goldfarb holding the largest position of 2.07 million shares, representing 2.44 percent of the shares outstanding.
Market Cap: 8.11 Billion, P/E: 20.40
Business Predictability: 4/5, Financial Strength: 8/10, Profitability & Growth: 8/10
PetroChina Co Ltd (PTR) is trading at a low P/B ratio of 1.21, near its 10-year low of 1.16. The company produces and sells oil and gas in China. It operates in four segments: Exploration and Production, Refining and Chemicals, Marketing, and Natural Gas and Pipeline. The stock is undervalued in relation to its five-year median P/B ratio. The book value per share is growing more in line with its five-year annual average of 7.3 percent than its 10-year annual average of 10.7 percent. The book value per share grew at a rate of 6.6 percent over the past 12 months. If priced at its 5-year median ratio of 1.5, the stock would be trading for $153.40. The stock is held by seven gurus we follow with Ray Dalio of Bridgewater Associates holding the largest position of 39,597 shares, representing a negligible percentage of the shares outstanding.
Market Cap: 235.22 Billion, P/E: 10.80
Business Predictability: 4.5/5, Financial Strength: 7/10, Profitability & Growth: 8/10
Imperial Oil Ltd (IMO) is trading at a low P/B ratio of 2.06, near its 10-year low of 1.93. The company is engaged in the exploration for, production, and sale of crude oil and natural gas in Canada. It operates through three segments: Upstream, Downstream, and Chemical. Imperial Oil’s growth in book value per share has been accelerating with 10-, 5-, and 1-year annual growth rates of 16.1, 20.1, and 24.4 percent. If the company can maintain its book value growth, the stock is largely undervalued. At its 10-year median P/B of 4 and 5-year median P/B of 2.7, the stock would be priced at $95.00 and $64.50. The stock is held by seven gurus we follow with Ray Dalio of Bridgewater Associates holding the largest position of 338,900 shares, representing 0.04 percent of the shares outstanding.
Market Cap: 39.49 Billion, P/E: 11.50
Business Predictability: 2.5/5, Financial Strength: 8/10, Profitability & Growth: 7/10
The following proven strategies at GuruFocus have also beaten the S&P 500 since inception:
- Buffett-Munger Screener Top 25 –Outperforming the S&P by 12.03% since 2009.
- Top 25 Undervalued Predictable Companies – Outperforming the S&P by 25.36 percent since 2009.
- Top 25 Historical Low P/S Ratio Companies – Outperforming the S&P by 23.48 percent since 2010.
For the complete list of stocks are traded at close to their historical low P/B ratios, go to:GuruFocus Value Strategies of Stocks That Are Traded at Historical Low P/B.
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